Impact of Chinese financial shocks: A GVAR approach

Impact of Chinese financial shocks: A GVAR approach

Blog Article

This article analyzes the influence of Chinese financial shocks on emerging and advanced economies using a GVAR (Global Dice Sets Vector Autoregressive) from 1985Q4 to 2016Q4.We summarize our findings in five points: i) adverse shocks in Chinese financial markets can cause a global recession; ii) these shocks trigger the "flight to quality", leading to the depreciation of domestic currencies to the U.S.dollar; iii) stock and exchange markets contribute to transmitting the shock to domestic economies; iv) commodity prices are sensitive to these shocks; v) the impact of the Chinese financial shock increased in the new millennium.Finally, the financial system of toys China has the potential to provoke worldwide macroeconomic fluctuations.